TAXATION
Retail


CMU Daily reports that the long running campaign to close the VAT loophole that gave mail-order CD sellers based on the Channel Islands an unfair advantage over mainland retailers is facing its final hurdle as legal representatives for Jersey and Guernsey try to fight the UK government’s plan to end the tax arrangement through the courts. Highlight the fact that any such move would radically increase the admittedly low unemployment rate on the islands and that back-end providers such as Indigo Starfish (who service Amazon) and play.com will simply move to other tax free havens, the first attempt has already failed in the High Court. The relevant taxation exception, the Low Value Consignment Relief (LVCR), meant that companies could sell products under £18 (or more recently £15) by mail-order from outside the EU into the UK without charging Value Added Tax. The tax dodge was originally set up because the quantity of such sales was so low, and the cost of administering the collection of the VAT was relatively high, meaning HMRC would potentially lose revenues. High Street retailers such as HMV have long campaigned against the Relief. An appeal against Mitting J’s decision is being considered.